Liquidity Depth [AlgoAlpha]

8 Mac

OVERVIEW
This script visualizes market liquidity by identifying key price levels where significant volume has transacted. It highlights zones of high buying and selling interest, helping traders understand where liquidity is accumulating and how price may respond to these areas. By dynamically tracking volume at highs and lows, the script builds a real-time liquidity profile, making it a powerful tool for identifying potential support and resistance levels.

CONCEPTS
Liquidity depth analysis helps traders determine how price interacts with supply and demand at different levels. The script processes historical volume data to distinguish between high-liquidity and low-liquidity zones. It assigns transparency levels to plotted lines , ensuring that more relevant liquidity areas stand out visually. The script adds a profile to show the depth of liquidity (derived from historical volume data) for levels above and below the current price

FEATURES

1. Liquidity Levels: Tracks liquidity levels based on volume concentration at price high and lows.
   
2. Volume-Based Transparency: More significant liquidity levels are displayed with higher visibility, showing their significance.
   
3. Interpolation: interpolates the bullish and bearish liquidity depth at a user defined range away from the price, helping in comparing the liquidity amounts between bullish and bearish.
   
4. Depth Profile: Allows traders to visualize depth of liquidity in a more quantitative and clearer way than the liquidity levels/list]
   

USAGE
This indicator is best used to track liquidity levels and potential price reaction areas. Traders can adjust the Liquidity Lookback setting to analyze past liquidity levels over different historical periods. The Profile Resolution setting controls the granularity of liquidity depth visualization, with higher values providing more detail. The script can be applied across different timeframes, from intraday scalping to swing trading analysis. The plotted liquidity zones provide traders with insights into where price may encounter strong support, resistance, or potential liquidity-driven reversals.

10 Mac

Nota Keluaran

Added alerts for interpolated liquidity bull/bear switches.